LOBBYING PAYS WELL

WPP profits top £1bn as ad giant’s boss embraces “scary” AI revolution

Simon English
Fri, 24 February 2023 

(WPP)

WPP offered hope today that the economy could be in for a “soft landing” as clients resumed spending and profits zipped past £1 billion.

The ad giant founded by Sir Martin Sorrell saw revenues in 2022 up nearly 13% to £14.4 billion.

New clients include Audible, Verizon and Danone.

Chief executive Mark Read, in charge since Sorrell’s awkward departure five years ago, said the advertising world and the wider economy is in “a better place than people had feared”.

The bad recession predicted by many seems far from inevitable. “I think we are going to see a longer, smoother, landing than people thought last year,” he said.

The final dividend is up 30% to 24.4p, good news for shareholders including Sir Martin, who left after a row about alleged mis-use of company money and claims of a “fear culture” at the business.

Profits for the year jumped 22% to £1.16 billion.

Read thinks the growth of AI is going to challenge advertising as much as any industry.

“The impact of AI on our business and every knowledge business is going to be fundamental,” he said: “Parts of it are scary, it will do a lot of tasks that are now done by people.”

WPP has already embraced the AI revolution, using it in work for Nike featuring Serena Williams.

Read added: “We see it as a tool in a marketer’s kit, used to make workflows more efficient, rather than as a path to removing humans from the process. In fact, we believe it shows how valuable true creative thinking really is.”

A global slowdown in marketing and advertising spending post pandemic looks to be reversing.

Sophie Lund-Yates at Hargreaves Lansdown said: “WPP is a titan of industry. Its sheer size means gaining momentum and getting into shape is a huge challenge, but it’s one the company has risen to. The largest concern for investors was how successful WPP will be in realising its cost efficiencies, with £600m due to be found by 2025. The fact this target remains in focus and on track is a genuine relief.”

WPP shares rose 44p to 1062p, which leaves the business valued at £11.4 billion.

The company has both clients and staff in Ukraine. It has divested from Russia, leading to a loss of £63 million.

WPP and its staff have donated $1.35 million to Ukraine charities.